School districts: auxiliary organizations.

Entirely new Chapter 5 (Sections 35800-35809) added to the Education Code, creating a statutory framework for K-12 school districts to establish auxiliary organizations. Previously only community college districts and public universities had this authority.

Commercial services operated by auxiliary organizations on a schoolsite (such as food service or bookstore) must be self-supporting. Surplus funds from commercial operations must be used for purposes consistent with governing board regulations.

Defines 'auxiliary organization' broadly to include entities where district officials serve as directors, entities operating commercial services on school property, entities whose purpose is to promote or assist a schoolsite with board-appointed directors, and any entity designated by the governing board. Also defines 'schoolsite' as a school maintained by a school district.

Requires each auxiliary organization to select a certified public accountant who must annually audit all funds, submit audits to the State Department of Education, and publish audited financial statements widely. When serving a single schoolsite, publication in the school newspaper or website suffices.

Requires auxiliary organization employees to receive salaries, working conditions, and benefits comparable to school district employees performing similar services. Temporary employees (fixed-term under 3 years or grant-funded project staff) and executive employees may be exempt from retirement and permanent status benefits. A 3-year exemption from retirement benefits is allowed for newly created organizations.

Requires auxiliary organization boards to hold at least one business meeting per quarter, conduct business in public meetings under the Brown Act (Government Code Section 54950), and have access to advice from at least one California-licensed attorney and one licensed CPA.

Requires school district governing boards to institute a standard systemwide accounting and reporting system, implement financial standards ensuring fiscal viability (including working capital, reserve funds, and provisions for new business), ensure transactions are within the educational mission of the district, and develop policies for indirect cost payments.

Auxiliary organizations may enter into joint powers agreements with federal, state, or local governmental entities. They may accept grants, contracts, bequests, trusts, and gifts, but only if conditioned to be used for purposes consistent with the school district's policies.

Imposes conflict of interest rules: board members cannot be financially interested in contracts with their organization (violations are void). A safe harbor exists if the interest is disclosed at a public meeting and approved by a sufficient vote excluding the interested member. The safe harbor does not apply to direct contracts between the organization and the board member, their partnerships, or corporations where they hold 5% or more of common stock.

Makes it unlawful for any person to use non-public information received through auxiliary organization board membership for personal pecuniary gain, whether or not they are still a board member at the time the gain is realized.

The original Section 300 amendment (nonsubstantive grammar fixes to Proposition 58 findings about English language education) is retained but moved to the end of the bill as a separate section, no longer the primary purpose of the legislation.